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City decays as debt climbs

The city's debt level is skyrocketing and Toronto is falling further and further behind on much-needed repairs, city council was told yesterday as members approved this year's capital budget.

"It's difficult for many people to fathom how deep in debt we are, how much deeper in debt we're going, and how at the end of this plan we have (room for) no further debt that we can take on," Councillor David Shiner said yesterday.

Construction crews work on the St. Clair streetcar line in September 2006. City council approved on March 7 this year's capital budget, of which nearly 51 per cent will be spent on the TTC alone. (TONY BOCK / TORONTO STAR FILE PHOTO)

Still, following a day of acrimonious debate, councillors endorsed a $1.432 billion budget that includes everything from a $3.7 million program to calm neighborhood traffic and add bike lanes, to $2.9 million for a new meeting room at city hall and more office space for Mayor David Miller's staff.

Miller called it a "city building" budget. But several councillors said the city is flirting with big trouble by more than doubling its debt and failing to dig into a huge backlog of repair projects ranging from eroding roads to Toronto Zoo improvements.

City officials said Toronto's debt was $1.7 billion in 2005 but will increase to more than $2.6 billion this year and is expected to balloon beyond $3.1 billion by 2011. This year, the city will spend 12.6 per cent of its property tax revenues on debt servicing. That figure is expected to rise to 15.4 per cent by 2011.

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Shiner said the city's debt servicing will cost every Toronto household roughly $2,352 over the next five years. "Many people don't know how they're going to afford that, and we don't have a plan to pay for it," he said.

But Miller told reporters at the end of the day, "It's a very good budget. It invests in Toronto as far as we can within our means. It places public transit as our first priority, which is essential if Toronto is to keep moving."

Nearly 51 per cent of the budget will be spent on the TTC alone, officials said.

"The key thing to remember is that the debt payments are like a mortgage," Miller said. "We're paying off principal. It's not just interest, not like the federal and provincial government are just paying ..." Fifteen per cent (debt servicing) is a sustainable target. Do I worry? Yes. What we need is permanent, sustainable funding for public transit."

"If we stick to the program and keep these targets, we'll still have a AA-1 credit rating at the end of our five-year program," said the budget chief, Councillor Shelley Carroll.

Carroll said the budget includes money to renew Casa Loma and Fort York, add 72 replacement beds at Eva's youth shelter and 60 spaces in the new Bethlehem United Shelter.

There's also money to expand libraries in the Jane-Sheppard area and Thorncliffe Park, and for a new police training facility and a first-ever community centre in the former city of York.

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Councillors were told the backlog for putting city roads, parks and other facilities into what is called a "state of good repair" will jump from about $1.1 billion this year to almost $1.4 billion in 2011.

The roads backlog alone is $300 million, but there's only $5 million budgeted for that purpose this year, down from $10 million last year. Miller said the issue wasn't even addressed for years before he became mayor.

"The city has tough financial challenges," Miller said. "And until we get a national transit strategy and 1 cent of the GST and have the provincial services uploaded that should be, like the Ontario Drug Benefit Plan, we're going to be in difficult financial straits. That's why those backlogs are growing.

"Do we need to do more, particularly in parks? Yes. But on the other hand, parks and roads last year were unable to spend all the money allocated. There are only so many contractors to do the work."

The city's operating budget last year was $7.6 billion. This year's budget will be unveiled later this month.

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